In the study, Medicaid coverage had no significant effect on the prevalence or diagnosis of hypertension or high cholesterol levels. Gabe Palmer/CORBIS

May 2, 2013

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Two leading U.S. health economists published a study on Wednesday suggesting that providing low-income people with health insurance makes them happier but not much healthier. The study, published in the New England Journal of Medicine, is based on Oregon's limited expansion of Medicaid, and it dropped into the ongoing debate about ObamaCare like a ton of wonkish bricks.

Here's why the study is so important: In 2008, Oregon had enough money to enroll 10,000 low-income adults in Medicaid, but 90,000 eligible people applied. So Oregon held a lottery, bad news for 80,000 applicants but a gold mine for health researchers who now had the ingredients for a randomized controlled study on the effects of giving people health care.

And an initial 2011 report had promising results: The new Medicaid patients said they felt healthier and happier. The follow-up confirmed that the new enrollees had significantly lower rates of depression and financial strain, but it "found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions." In other words, on three easily measurable indicators of health, there was no statistically significant improvement.

"It's disappointing," Zeke Emanuel, a former Obama health policy adviser, tells The Washington Post. "This says there are benefits to providing Medicaid but that we also need to fix the system." ObamaCare opponents, not surprisingly, had a more critical take.

This study "throws a huge 'STOP' sign in front of ObamaCare's Medicaid expansion,"says Michael Cannon at the Cato Institute. ObamaCare supporters promised that giving people health insurance would save lives, and half the expanded coverage was supposed to be through Medicaid. Well, "there is no way to spin these results as anything but a rebuke to those who are pushing states to expand Medicaid," says Cannon. States would be foolish to sign up now that "the best-designed research available cannot find any evidence that it improves the physical health of enrollees," he adds.

This is "bombshell news" in the ObamaCare debate, says Megan McArdle at The Daily Beast. And undoubtedly "many voters going to the polls last November, and governors considering whether to do the ObamaCare Medicaid expansion this spring, would probably have liked to have had this data sooner." The study only measured blood pressure (stroke), glycated hemoglobin levels (diabetes), and cholesterol (heart disease), but this "is the stuff that we're very good at treating, and which we're pretty sure has a direct and beneficial effect on health," says McArdle. In other words, "these are the major chronic diseases we should be expecting Medicaid to help." She elaborates:

There was, on the other hand, a substantial decrease in reported depression. But this result is kind of weird, because it's not coupled with a statistically significant increase in the use of anti-depressants. So it's not clear exactly what effect Medicaid is having. I'm not throwing this out: Depression's a big problem, and this seems to be a big effect.... I'm not sure what the policy implication is. If you wanted a program to cure depression, Medicaid is probably not what you'd design....

It's one of two major [random controlled trials] that have ever been done on insurance. And like the first one, it doesn't show a significant effect. That is huge news. Not good news — obviously, it's much nicer if giving people money to pay for health care makes them obviously much healthier. But big. And it's actually bigger and more important than ObamaCare. We should all be revising our priors about how much health insurance — or at least Medicaid — really promotes health. What this really tells us is how little we know about health care, and making people healthy. [Daily Beast]

The conservatives and libertarians citing this study as proof that expanding Medicare is wrong have "me wondering: Did they read the same study that I did?" says Jonathan Cohn at The New Republic. Yes, the report "does call into question one important claim liberals have made about Medicaid — and liberals who make that claim need to start qualifying it." But, Cohn adds, you're missing the story if you dismiss the other two big, equally important findings: The big improvement in mental health and that "Medicaid virtually wiped out crippling medical expenses among the poor."

That may sound obvious — of course people with insurance are less likely to struggle with medical bills. But it's also the most under-appreciated accomplishment of health insurance: Whatever its effects on health, it promotes economic security.... While only a small portion of people will experience financial shock in any given year, over time many more will — which means many more will benefit from the protection that Medicaid provides....

Does that make Medicaid a worthwhile investment? That's obviously a value judgment, one no economic study can answer. But health policy experts Aaron Carroll and Austin Frakt pose an awfully good question at The Incidental Economist blog. Financial protection is the reason most Americans who can afford health insurance buy it. If that rationale is good enough for everybody else, why isn't it good enough for the poor? [New Republic]

Like everything else in this debate, these findings "are like a health insurance ink blot,"says Ray Fisman at Slate: "People see in it whatever they need to validate their existing position on ObamaCare and universal coverage for the poor more generally." But it isn't good news for ObamaCare supporters, especially those who touted the 2011 study, and "it's time for liberal media types like myself to eat some humble pie," says Fisman:

The findings should give pause to even those who are most committed to universal health insurance. We shouldn't expect the Affordable Care Act to make Americans healthier (except in terms of mental well-being). The ACA will put millions of low-income individuals across the country into Medicaid programs that look a lot like what's available in Oregon....

If you're committed to better health for the poor, though, the latest Oregon results are not a reason to give up on the cause completely. Rather, the Oregon experiment is yet another argument in favor of the increasingly common view that access to medical care is necessary but far from sufficient for good health. What's the use in prescribing statins to reduce cholesterol to patients who don't take their meds, continue to consume potato chips and soda unabated, and ignore health care providers' pleas to walk more and drive less? But changing habits, compliance, and lifestyles is a much taller order, and viewing health care in this way can make the Affordable Care Act, despite its enormous ambitions, seem almost too timid or narrow in its focus. [Slate]